High-LVR lending falls to 5.6% over six months

Release date

29 April 2014

The Reserve Bank today said that
high loan-to-value ratio (high-LVR) residential mortgage lending had fallen to
5.6 percent for the six months to the end of March 2014.

Deputy Governor Grant Spencer said: "Our initial assessment is that
restrictions on high LVR lending helped reduce house price inflation. A more
in-depth assessment of the policy and its impact on the housing market will be
included in next month's Financial Stability Report."

All banks have complied with rules that restrict high-LVR residential
mortgage lending to no more than 10 percent of total new mortgage lending. In
September 2013, before the introduction of the new rules, high-LVR lending was
approximately 25 percent of all mortgage lending.

The restriction came into force on 1 October last year and 31 March 2014 was
the end of the first six month period over which all registered banks had to
comply. Future compliance with the high-LVR lending rules will be measured
against a 3-month rolling average for banks with more than $100 million per
month of mortgage lending (ANZ, ASB, BNZ, Kiwibank and Westpac) and a 6-month
rolling average for banks with less than $100 million per month of mortgage
lending.

High-LVR loans are those that are made to someone
borrowing more than 80 percent of the value of the property that is
mortgaged.

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